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Corruption and poverty: a review of recent literature
Corruption alone does not produce poverty
Authors:
E. Chertwynd; F. Chetwynd; B. Spector
Publisher:
Development Experience Clearinghouse, USAID, 2003
This paper argues that corruption, by itself, does not produce poverty. The author states that corruption has direct consequences on economic and governance factors, and it is the intermediaries that in turn produce poverty. An economic model and a governance model are offered as explanations for the link between corruption and poverty.
The Economic Model postulates that corruption affects poverty by impacting economic growth factors, which in turn, impact poverty levels and exacerbate income inequality. Essentially this occurs through discouraging foreign and domestic investment, taxing and dampening entrepreneurship, lowering the quality of public infrastructure, decreasing tax revenues, diverting public talent into rent-seeking, and distorting the composition of public expenditure. Alternatively, the Governance Model asserts that corruption affects poverty by influencing governance factors, which, in turn, impact poverty levels.
On the basis of these analyses, the author concludes that anti-corruption programs crafted to address:
- economic growth
- income distribution
- governance capacity
- government health and education services
- public trust in government
are likely to reduce corruption and poverty as well.
